As a follow-up to our blog on exempt versus non-exempt employees, there are conditions in which exempt employees can have pay reductions. If your employee position has been determined to meet the criteria for exemption, and the employer chooses to make the position exempt, deductions from pay for sickness/disability or personal reasons may only be made as follows:
Employers With Bona Fide Leave Plan:
Status: Exempt
Absence: Sickness or Disability
Absence Period: Partial Day
Can be forced to use leave time. If leave is exhausted or has not become effective yet, no reduction in pay is allowed; however the leave balance may be reduced to the negative.
Status: Exempt
Absence: Sickness or Disability
Absence Period: Full Day
Can be forced to use leave time. If leave is exhausted or has not become effective yet, a full day reduction in pay is allowed (an employer may pay leave time where the balance is zero thereby reducing the leave balance to the negative).
Status: Exempt
Absence: Personal
Absence Period: Partial Day
Can be forced to use leave time. If leave is exhausted or has not become effective yet, no reduction in pay is allowed; however the leave balance may be reduced to the negative.
Status: Exempt
Absence: Personal
Absence Period: Full Day
Can be forced to use leave time. If leave is exhausted or has not become effective yet, a full day reduction in pay is allowed (an employer may pay leave time where the balance is zero thereby reducing the leave balance to the negative).
Employers Without Bona Fide Leave Plan:
Status: Exempt
Absence: Sickness or Disability
Absence Period: Partial Day
No reduction in pay is allowed.
Status: Exempt
Absence: Sickness or Disability
Absence Period: Full Day
No reduction in pay is allowed unless the full workweek is not worked.
Status: Exempt
Absence: Personal
Absence Period: Partial Day
No reduction in pay is allowed.
Status: Exempt
Absence: Personal
Absence Period: Full Day
Reduction in pay is allowed.
If you would like to learn more information on salary basis requirements, please visit the Wage and Hour Division of the U.S. Department of Labor website: http://www.dol.gov/whd.
Friday, February 12, 2010
Monday, February 1, 2010
Exempt Vs. Non-Exempt
EMPLOYEE CLASSIFICATION
The decision to have an employee classed as exempt or non-exempt is one of our most frequently asked questions. An employee classified as exempt means they are exempt from over-time pay and minimum wage. While this classification is tempting to companies to avoid costly over-time pay, the incorrect classification could result in a serious wage and hour violation.
The Federal Labor Standards Act (FLSA) is a federal law that sets minimum wage and overtime pay. As a federal law, it preempts state wage and hour requirements unless the state guidelines are more beneficial to the employee. The FLSA specifies that non-exempt employees must be paid at least the current federal minimum wage rate for the first 40 hours worked in a workweek (seven consecutive 24-hour periods) and must receive an overtime rate of at least time and one-half their regular rate of pay for all hours worked over 40 in a workweek.
Classifying employees as exempt or non-exempt is not easy. The determination should be made not on the job title or the way the employee is paid, but be based on the job duties associated with the position. Three tests are generally used to determine if an employee meets one of the white collar exemptions: salary level, salary basis and job duties. Note: The salary level and salary basis tests do not apply to doctors, lawyers, teachers, certain computer-related occupations or outside sales employees.
Executive Exemption: Paid on a salary basis at a rate not less than $455 per week; primary duties are managing the enterprise, or managing customarily recognized department or subdivision; employee must customarily and regularly direct the work of at least two ore more other full-time employees or their equivalent; and employee must have authority to hire or fire other employees, or the employees suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.
Administrative Exemption: Paid on a salary basis at a rate not less than $455 per week; performance of office or non-manual work directly related to management or general business operations; and primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
Professional Exemption: Paid on a salary basis at a rate not less than $455 per week; primary duty must be performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and includes work requiring the consistent exercise in discretion and judgment; the advanced knowledge must be in a field of science or learning; and the advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction. As a creative professional, the employee must be paid on a salary basis at a rate not less than $455 per week; primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
Computer Employee Exemption: Paid either on a salary basis at a rate not less than $455 per week or, if compensated on an hourly basis, at a rate of not less than $27.43/hour; the employee must be employed as a computer systems analyst, computer programmer, software engineer or similarly skilled worker in the computer field; primary duties must consist of application of systems analysis techniques and procedures, design, development, analysis, creation, testing or modification of computer systems and programs related to machine operating systems or any combination of the aforementioned duties.
Outside Sales Exemption: Employee's primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which consideration will be paid by client or customer; and the employee must be customarily and regularly engaged away from the employer's place or places of business.
These exemptions apply only to "white collar" employees who meet the salary and duty tests. It does not apply to manual laborers or other "blue collar" workers who perform work involving their hands, physical skill and energy. The exemptions also do not apply to police, fire fighters, paramedics and other first responders.
This publication is for general information and is not to be considered in the same light as official statments of position contained in the regulalations from the Department of Labor.
Please watch for our next post:
Exempt Status Pay Reductions...what are the circumstances in which the employer can make a deduction from pay for exempt level employees?
The decision to have an employee classed as exempt or non-exempt is one of our most frequently asked questions. An employee classified as exempt means they are exempt from over-time pay and minimum wage. While this classification is tempting to companies to avoid costly over-time pay, the incorrect classification could result in a serious wage and hour violation.
The Federal Labor Standards Act (FLSA) is a federal law that sets minimum wage and overtime pay. As a federal law, it preempts state wage and hour requirements unless the state guidelines are more beneficial to the employee. The FLSA specifies that non-exempt employees must be paid at least the current federal minimum wage rate for the first 40 hours worked in a workweek (seven consecutive 24-hour periods) and must receive an overtime rate of at least time and one-half their regular rate of pay for all hours worked over 40 in a workweek.
Classifying employees as exempt or non-exempt is not easy. The determination should be made not on the job title or the way the employee is paid, but be based on the job duties associated with the position. Three tests are generally used to determine if an employee meets one of the white collar exemptions: salary level, salary basis and job duties. Note: The salary level and salary basis tests do not apply to doctors, lawyers, teachers, certain computer-related occupations or outside sales employees.
Executive Exemption: Paid on a salary basis at a rate not less than $455 per week; primary duties are managing the enterprise, or managing customarily recognized department or subdivision; employee must customarily and regularly direct the work of at least two ore more other full-time employees or their equivalent; and employee must have authority to hire or fire other employees, or the employees suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.
Administrative Exemption: Paid on a salary basis at a rate not less than $455 per week; performance of office or non-manual work directly related to management or general business operations; and primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
Professional Exemption: Paid on a salary basis at a rate not less than $455 per week; primary duty must be performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and includes work requiring the consistent exercise in discretion and judgment; the advanced knowledge must be in a field of science or learning; and the advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction. As a creative professional, the employee must be paid on a salary basis at a rate not less than $455 per week; primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
Computer Employee Exemption: Paid either on a salary basis at a rate not less than $455 per week or, if compensated on an hourly basis, at a rate of not less than $27.43/hour; the employee must be employed as a computer systems analyst, computer programmer, software engineer or similarly skilled worker in the computer field; primary duties must consist of application of systems analysis techniques and procedures, design, development, analysis, creation, testing or modification of computer systems and programs related to machine operating systems or any combination of the aforementioned duties.
Outside Sales Exemption: Employee's primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which consideration will be paid by client or customer; and the employee must be customarily and regularly engaged away from the employer's place or places of business.
These exemptions apply only to "white collar" employees who meet the salary and duty tests. It does not apply to manual laborers or other "blue collar" workers who perform work involving their hands, physical skill and energy. The exemptions also do not apply to police, fire fighters, paramedics and other first responders.
This publication is for general information and is not to be considered in the same light as official statments of position contained in the regulalations from the Department of Labor.
Please watch for our next post:
Exempt Status Pay Reductions...what are the circumstances in which the employer can make a deduction from pay for exempt level employees?
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